Vulnerable workers bill finally clears Parliament

Big fines and a new accessorial liablity regime for franchies companies are on the way after Parliament last night finally passed the Vulnerable Workers Bill...

New laws imposing greater penalties on employers who abuse employees through wage and entitlement theft and fraud are finally on the way following urgent action by the House of Representatives last night.

Australia’s Parliament swung into action of the last few days to pass the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017.

The House of Representatives last night agreed and passed the changes made on Monday to the Bill by the Senate (See yesterday's WorkplaceInfo article “Vulnerable Workers Bill passes Senate”).

The bill will become law the day after it receives the Royal Assent (a final, administrative, measure), from the Governor General. However, the new franchisor and holding company liability regime will start six weeks after that.

Key points of the new law

In summary, the key points of the new law are:

it applies high financial penalties, up to 10 times the current maximum penalties, for “serious contraventions”

maximum penalties of $630,000 could be levied on a corporation per serious contravention

individuals could be fined up to $126,000 for each serious contravention

record keeping and pay slip breaches will attract high fines

up to $63,000 for companies; and

$12,600 for individuals;

an express prohibition on employers from unreasonably requiring employees to make payments (e.g.‘cash-back’ arrangements)

introduces a new liability regime for certain franchisors and holding companies that are responsible for underpayments by their franchises where:

they knew, or reasonably should have known, about the contraventions; and

failed to take reasonable steps to prevent them

it empowers the FWO with new evidence gathering powers

the FWO will be able to require the fair work ombudsman to provide information or documents to the FWO

workers and executives can be compelled to attend before senior FWO officials to answer questions on oath or affirmation about underpayments of workers

anyone who hinders or obstructs Fair Work Inspectors, or who provides them with false or misleading information, will be subject to new penalties.

A range of protections have been introduced into the bill and these include supervision by the Administrative Appeals Tribunal and the Commonwealth Ombudsman; the right to have a lawyer present; and rules preventing evidence being used against a compelled person.

A warning from the Fair Work Ombudsman

Commenting on the new powers, the Fair Work Ombudsman Natalie James said:

“We will always welcome new tools, resources or powers that will help the agency address serious cases of non-compliance and exploitation in the workplace, especially when it comes to protecting the most vulnerable members of our community. My agency will continue to be fair and balanced in its approach and will to operate in accordance with our compliance and enforcement policy.

“However, employers who know their obligations and systematically fail to meet their workplace obligations should be on notice that we will use all the powers at our disposal. Now is the time for franchise systems that care about their reputation to take steps to ensure their employees receive their lawful entitlements. The Fair Work Ombudsman will work with any franchise that is serious about doing the right thing by its workers."

Cross-party support

The Vulnerable Workers Bill attracted wide, cross-political, support during its passage through parliament owing to the odious nature of wage-abuse, particularly by franchisees, which was uncovered by investigative journalists.

When introducing the bill to Parliament, Liberal Party MP and immigration minister Peter Dutton commented that it was “apparent that there are some cases of widespread underpayment or coercion of workers,” and he called on all politicians to support the government in “stamping out worker exploitation”.

ALP Senator Lisa Singh told the House of Representatives that “when we talk about protecting vulnerable workers, we are talking about workers across a range of industries from construction to carpentry to welding to the meat industry as well as domestic workers, market garden workers, horticultural—I have so many examples in this submission to our modern slavery inquiry of workers who have simply been ripped off and who have been treated appallingly, all because of their employers obviously doing wrong by them.”

Similar comments were made by politicians from the minor parties.

Unfair madness and the greasy spoon cafe

However, one note of caution was sounded by independent politician and libertarian Senator David Leyonhjelm who inveighed against the bill, warning that it could destroy jobs and franchising in Australia.

“The bill before us today also hits franchisors with $100,000 fines when someone else, a franchisee, does not comply with the fair work law, even though the franchisor does not know about, help or encourage the noncompliance.

“This is unjust. It's like a wrathful God incensed by the sins of the father and visiting them upon the son.

“It will also stop the franchise business model in its tracks. Australia will be forced back into the 1970s where, instead of a franchise restaurant or cafe, we ate at a local greasy spoon and, instead of ducking into an IGA to pick up some groceries, we would be lucky if we picked up a wilted lettuce at a dusty corner store. Businesses will become more and more reluctant to offer budding entrepreneurs a franchise, which is an easy way for them to start their own business. Instead, thousands of budding entrepreneurs will have to continue to work for the man, rather than become their own boss.”

“This is a bill of the Liberal-National government and it is furiously supported by Labor and the Greens. These major parties pretend that fairness can be achieved by making a declaration in legislation rather than through voluntary deals struck between established businesses, budding entrepreneurs and workers.

“The Liberal Democrats stand against this madness. Just like the emperor has no clothes, the fair work system actually isn't fair,” Senator Leyonhjelm said.